HINDUSTAN PETROLEUM CORPORATION LTD. Vs. TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION LIMITED AND ORS.

JUDGEMENT

(1.) BY consent this writ petition is taken up for final disposal.

(2.) THE petitioner Company is a Public Sector Undertaking and would state in the affidavit filed in support of this writ petition that based on the guidelines issued by the Government of India, initial batch of power projects were awarded on the basis of negotiations between the State Electricity Board and the power producer which is otherwise called as "Memorandum of Understanding" (MOU) and it was permitted till 18.02.1995 by the Ministry of Power, Government of India. A Power Purchase Agreement (PPA) as per the above said guidelines was executed on 12.09.1996 between the Tamil Nadu Electricity Board (TNEB), now Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO)/first respondent and the second respondent, namely M/s. GMR Vasavi Power Corporation Ltd., Chennai -600012, for a period of 15 years and the norms for the operation of the power project are as per the notification dated 30.03.1992. The power project consists of four units of 49 MW Diesel Engine each, totalling to 196 MW.

(3.) IT is further stated by the petitioner that for supply of fuel, namely Low Sulphur Heavy Stock and to operate the power plant run by the second respondent, a Fuel Supply Agreement dated 04.12.1996 was executed between the petitioner and the second respondent, which shall have a initial term of 15 years commencing on the date of the agreement, unless extended or earlier terminated in accordance with the terms of the agreement and it also provides among other things that the first respondent has right to seek extension of PPA and would make such a request in writing not less than 18 months before the expiry of the current term of the PPA. The Fuel Supply Agreement entered into between the petitioner and the second respondent provides among other things that the price to be paid by the second respondent shall be based on the quality of fuel supplied in accordance with the agreement and that on the first day of each month, the petitioner shall deliver to the second respondent invoice for the fuel delivered and invoicing and payment method has been provided in Article 7 of the said agreement. The agreement also provides for furnishing Letter of Credit [LOC] by the second respondent to the petitioner and failure to pay the bills as and when due, shall attract interest as agreed in the agreement. The terms of the PPA also provide that the bills raised by the petitioner will be forwarded to the first respondent by the second respondent along with other operational costs and the first respondent shall pay the fuel bills and other payments to the second respondent and the second respondent shall pay the fuel bills to the petitioner herein. The outstanding of the second respondent are normally covered by Standby Letter of Credits and Usance Letter of Credits and Standby LOCs are not discounted and are kept only as security and Usance LOCs are discounted at the end of the supply period for which they are provided and both LOCs, as per the terms, cover only dues against fuel supplies and it was regularly monitored by the petitioner and communicated to the second respondent in case of any deviations noted/observed.